Asset-Based Approaches to Poverty Reduction in a Globalized Context

Abstract

This working paper provides a brief introduction to asset-based approaches to poverty reduction in a globalized context. The aim is to show the added value of asset-based approaches, in terms of both better understanding poverty and developing more appropriate long-term poverty reduction solutions. The paper draws on a number of sources, including: a longitudinal research project on Intergenerational asset accumulation and poverty reduction in Guayaquil 1978-2004; a number of associated background papers; and contributions to the recent Brookings Institution/Ford Foundation Workshop on Asset-based approaches to poverty reduction in a globalized context held in Washington DC on 27-28 June 2006.

The paper starts by outlining an asset accumulation framework, distinguishing between an asset index conceptual framework, as an analytical research tool, and asset accumulation policy, as an associated operational approach. It then elaborates on this framework through a number of basic questions:

What is an asset? This provides a definition of an asset and description of the five most widely known: human, physical, social, financial and natural capital assets.

What new insights can an understanding of asset accumulation give us about poverty reduction? Drawing on the results of the Guayaquil project, this section summarizes a number of asset accumulation stories, to show how analysis of the assets of the poor adds to our understanding of transitions out of poverty and upward mobility.

What is an asset-based approach? This section summarizes the four main asset-based approaches, identifying both analytical and operational approaches, as well as examples of implementation.

How does an asset index conceptual framework contribute to the diagnosis of poverty? To illustrate the utility of an asset index, this section shows how different capital assets are accumulated or eroded at different points over a 25-year period in Guayaquil.

What is an asset accumulation policy? This section summarizes differences and complementarities between social protection policy and asset accumulation policy. It then describes the different components of policies to accumulate assets, distinguishing between first and second generation policies.

How does an asset accumulation approach inform practice in different contexts or sectors? Drawing on workshop papers, this section shows how an asset accumulation framework informs poverty reduction analysis and operational interventions in a range of contexts and sectors. These include: communal assets in urban and rural contexts (housing, human settlements and natural resource management); asset building in post disaster and fragile state contexts; making markets work for the poor (financial assets, international assets and transnational asset accumulation); and assets, rights and citizenship.

The paper ends with a brief concluding comment and discussion of priority themes for further work.

Keywords: poverty, poverty reduction, global economy, asset accumulation policy, Caroline Moser

JEL Classification: I30